Press releases

Baxter Exceeds Expectations in Second Quarter with Strong Growth Across Global Franchises

Company Confirms Full-Year 2014 Outlook, Narrows EPS Range

DEERFIELD, Ill., July 17, 2014 - Baxter International Inc. (NYSE:BAX) today reported strong growth across its global franchises in the second quarter, generating sales and earnings that exceeded the company's previously issued guidance. The company also confirmed its financial outlook for 2014, narrowing the guidance range for adjusted earnings per diluted share to $5.10 to $5.20.

Baxter posted net income of $520 million and earnings per diluted share of $0.95 in the second quarter, compared to net income of $590 million and earnings per diluted share of $1.07 in the same period last year. Second quarter 2014 results include net after-tax special items totaling $172 million (or $0.31 per diluted share) primarily for intangible amortization and costs associated with contingent revenue and product development milestone payments, remediation efforts related to the in-progress SPECTRUM Infusion Pump recall, integration of the company's acquisition of Gambro AB, and Baxter's planned separation into two independent healthcare companies. These charges were partially offset by the reversal of certain business optimization and litigation reserves. Second quarter 2013 results included after-tax special items totaling $69 million (or $0.13 per diluted share).

On an adjusted basis, excluding special items in both periods, Baxter's second quarter net income of $692 million increased 5 percent from
$659 million reported in 2013. Adjusted earnings per diluted share of $1.26 also increased 5 percent from $1.20 per diluted share last year, exceeding the company's previously issued earnings guidance of $1.18 to $1.22 per diluted share.

Worldwide sales totaled $4.3 billion, which advanced 16 percent from
$3.7 billion reported in the same period last year. Sales within the United States grew 12 percent to $1.7 billion, and international sales of $2.5 billion increased 19 percent (foreign currency had no impact on sales growth). Excluding the contribution of Gambro revenues in the quarter totaling
$408 million, Baxter's worldwide sales rose 5 percent.

BioScience revenues advanced 7 percent to $1.8 billion compared to the prior-year period. Excluding the impact of foreign currency, BioScience sales rose
6 percent, with solid growth reported across all the global franchises. Performance was led by double-digit growth of ADVATE [Antihemophilic Factor (Recombinant), Plasma/Albumin-Free Method] and albumin, as well as increased global demand for GAMMAGARD LIQUID [Immune Globulin Intravenous (Human)], biosurgery products and select vaccines.

Medical Products sales of $2.5 billion grew 24 percent from the prior-year period, and excluding revenues associated with the Gambro acquisition, Medical Products sales increased 4 percent (foreign currency had no impact on sales growth). This performance was driven primarily by strong sales of injectable drugs, anesthetics and nutritional therapies, as well as gains in peritoneal dialysis patients, particularly in the U.S. and emerging markets.

"We are driving solid performance across our entire business portfolio, and advancing care across our key franchises in both developed and emerging markets" said Robert L. Parkinson, Jr., chairman and chief executive officer. "This provides a strong global foundation as we continue to improve our competitive position and performance, enhance operational, commercial and scientific effectiveness, meet challenges posed by the global marketplace, and create value for patients, healthcare providers, and other key stakeholders."

Six-Month Results
For the first six months of 2014, Baxter reported net income of $1.1 billion, or $1.96 per diluted share, compared to net income of $1.1 billion and earnings per diluted share of $2.07 reported in 2013. Excluding special items, Baxter's adjusted net income for the six-month period increased 7 percent to
$1.3 billion, and earnings per diluted share of $2.45 also increased 7 percent from $2.29 per diluted share reported in the comparable prior-year period.

Baxter's worldwide sales for the six-month period totaled $8.2 billion and increased 15 percent (or 16 percent excluding the impact of foreign currency). Excluding the contribution of Gambro revenues of $808 million, Baxter's worldwide sales rose 4 percent (or 5 percent excluding the impact of foreign currency).

BioScience sales of $3.4 billion increased 6 percent (foreign currency had no impact on sales growth), while Medical Products sales of $4.9 billion advanced 23 percent (or 24 percent excluding the impact of foreign currency) from the prior-year period. Excluding the contribution of Gambro revenues, Medical Products sales grew 3 percent (or 4 percent excluding the impact of foreign currency).

In the first half of 2014, Baxter generated cash flows from operations of approximately $1.2 billion and returned approximately $1.0 billion to shareholders through share repurchases of $450 million (or approximately
6 million shares) and dividends totaling $531 million (reflecting more than a
8 percent increase in dividend payments versus the prior-year period).

Recent Highlights
"During the quarter, Baxter announced a number of new product pipeline achievements and approvals, advanced collaborations, and marked progress towards our separation into two leading healthcare companies," continued Parkinson. "We remain on track to complete the separation by mid-year 2015."

Recent highlights include:

  • Global expansion of ADVATE, including European approval of a new production facility in Singapore, new multi-year tender awards in Australia and the UK, and new regulatory approvals in Turkey and Russia.  ADVATE is now approved in 62 countries.
  • Approval from the U.S. Food and Drug Administration (FDA) of BAXJECT III reconstitution system with ADVATE, reducing the number of steps in the reconstitution process for patients and caregivers.
  • European CE marking of myPKFiT, a new web-based individualized dosing device for prophylactic treatment of hemophilia A with ADVATE. The device allows physicians to calculate personalized ADVATE treatment regimens based on patient information and individual pharmacokinetic (PK) profiles.
  • Completion of dosing in the Phase III clinical trial of BAX 855, an investigational extended half-life, recombinant factor VIII treatment for hemophilia A. The ongoing trial is aimed at assessing the efficacy of
    BAX 855, and will also evaluate its safety and pharmacokinetic profile. Top line data is expected to be announced in the third quarter.
  • Presentation of a range of data on the company's bleeding disorder pipeline during the World Federation of Hemophilia World Congress in Australia, including studies on BAX 855, ADVATE, OBI-1, BAX 111 and
    BAX 930.
  • 510(k) clearance from the FDA for Baxter's next-generation SIGMA Spectrum Infusion Pump with Master Drug Library.
  • Presentation of data supporting the safety and efficacy of the VIVIA hemodialysis system at the European Renal Association and European Dialysis and Transplant Association (ERA-EDTA). The VIVIA system, which completed the CE marking in Europe late last year, is being introduced on a limited basis in select European dialysis clinics in 2014.
  • Initiation of Phase 3 trials for CHS-0214, an investigational etanercept biosimilar, in rheumatoid arthritis and chronic plaque psoriasis, by Baxter's partner Coherus BioSciences.
  • Announcement by Baxter's partner, CTI BioPharma, of the completion of enrollment in its PERSIST-1 pivotal trial of pacritinib for patients with myelofibrosis.
  • Acquisition of AesRx, including its sickle cell disease development program, Aes-103. The investigational treatment, which is currently being evaluated in a Phase 2 clinical trial, has the potential to address an extremely high unmet clinical need in a community with inadequate treatment options and no recent major clinical developments.
  • Naming of several key executives, including the chief financial officers for both the new biopharmaceutical and medical products companies and the new head of research and development for BioScience.

Outlook for Third Quarter and Full-Year 2014
Baxter also announced today its guidance for the third quarter and confirmed its guidance for the full year.

For the third quarter of 2014, the company expects sales growth of approximately 12 to 13 percent, excluding the impact of foreign currency.  Baxter expects earnings, before special items, of $1.28 to $1.32 per diluted share in the third quarter.

Baxter now expects sales growth for full-year 2014 of 10 to 11 percent, before the impact of foreign exchange. Also for the full year, Baxter expects earnings, before special items, of $5.10 to $5.20 per diluted share and cash flows from operations of approximately $3.5 billion, excluding cash costs related to the spin-off of the biopharmaceutical business.

The third quarter 2014 earnings guidance excludes approximately $0.07 per diluted share of projected intangible asset amortization expense. The full-year 2014 earnings guidance excludes the $0.62 per diluted share of special items comprising $0.49 per diluted share of items recorded in the first half of the year, and projected intangible asset amortization expense of $0.13 per diluted share for the remainder of the year. Reconciling for the inclusion of these items results in GAAP (Generally Accepted Accounting Principles) earnings of $4.48 to $4.58 per diluted share for the full-year 2014.

A webcast of Baxter's second quarter conference call for investors can be accessed live from a link on the company's website at beginning at 7:30 a.m. CDT on July 17, 2014. Please visit Baxter's website for more information regarding this and future investor events and webcasts.

Baxter International Inc., through its subsidiaries, develops, manufactures and markets products that save and sustain the lives of people with hemophilia, immune disorders, infectious diseases, kidney disease, trauma, and other chronic and acute medical conditions. As a global, diversified healthcare company, Baxter applies a unique combination of expertise in medical devices, pharmaceuticals and biotechnology to create products that advance patient care worldwide.

This release includes forward-looking statements concerning the company's financial results, business development activities, capital structure, R&D pipeline including results of clinical trials and planned product launches, outlook for 2014 and the planned separation of Baxter's biopharmaceutical and medical products businesses and the expected leadership of the two resulting companies after the separation. The statements are based on assumptions about many important factors, including the following, which could cause actual results to differ materially from those in the forward-looking statements: demand for and market acceptance of risks for new and existing products; future actions of regulatory bodies and other governmental authorities, including the FDA and foreign counterparts; product quality or patient safety concerns leading to product recalls, withdrawals, launch delays, litigation, or declining sales; U.S. healthcare reform and other global austerity measures; reimbursement and rebate policies of government agencies and private payers; product development risks; the ability to successfully separate the biopharmaceutical and medical products businesses on the terms or timeline currently contemplated, if at all, and achieve the intended results; accurate identification of business development and R&D opportunities and realization of anticipated benefits, including the ability to successfully integrate the Gambro business and achieve anticipated efficiencies; timely submission and approval of regulatory filings; inventory reductions or fluctuations in buying patterns; the impact of geographic and product mix on the company's sales; the impact of competitive products and pricing, including generic competition, drug reimportation and disruptive technologies; the availability of acceptable raw materials and component supply; fluctuations in supply and demand and the pricing of plasma-based therapies; the ability to enforce company patents; patents of third parties preventing or restricting the company's manufacture, sale or use of affected products or technology; the impact of global economic conditions on Baxter and its customers, including foreign governments; foreign currency fluctuations and other risks identified in Baxter's most recent filing on Form 10-K and other Securities and Exchange Commission filings, all of which are available on Baxter's website. Baxter does not undertake to update its forward-looking statements.